Smith v. Birmingham Disinfectant Co.

• Decision Date: 22 November 1911
• Citation: 174 Ala. 374,56 So. 721
• Parties: SMITH ET AL. v. BIRMINGHAM DISINFECTANT CO. ET AL.
• Court: Alabama Supreme Court

56 So. 721

174 Ala. 374

SMITH ET AL. v. BIRMINGHAM DISINFECTANT CO. ET AL.

Supreme Court of Alabama

November 22, 1911

Appeal from Circuit Court, Jefferson County; E. C. Crowe, Judge.

Bill by Mrs. D. M. Smith and others against the Birmingham Disinfectant Company and others for the appointment of a receiver and for an accounting. From a decree appointing a receiver, respondents appeal. Reversed and remanded.

Black &amp Davis and Barney L. Whatley, for appellants.

J. S Kennedy, for appellees.

SOMERVILLE J.

This appeal is taken from the action of the lower court appointing a receiver without notice to the opposite party.

The complainants are the owners of a majority of the stock in the defendant corporation. At a meeting of the stockholders, held in March, 1910, the defendants A. F. Stubbs and his wife, Mrs. Stubbs, including the complainant Mrs. D. M. Smith, were chosen as directors of the company. The said A. F. Stubbs was subsequently elected president of the company, and Mrs. Smith was elected as secretary. It is further alleged that subsequently W. L. Smith was elected president in the place of the said Stubbs. This statement is supplemented by the further one that a controversy arose between these contestants for the office of president, which was litigated in the courts, and was decided in favor of Stubbs; so the petition can derive no equity from it in a proceeding of this character.

The following allegations are made, based on the mere "information and belief" of the complainants: (1) That the said A. F. Stubbs has turned over to a new corporate company, called by him the "Standard Disinfectant Company," all the property and assets owned by the said Birmingham Disinfectant Company, including especially certain formulas purchased from Dr. Hayes and others. (2) That said Stubbs had permitted a part of the property of said company to be sold at execution sale; and that his wife had become the purchaser. (3) That he had sufficient funds as president of the company to purchase the same, but permitted the property to be sold, so that it might be purchased by his wife and used in the new company; and that the commencement of the suit had been fraudulently concealed, so as to carry out this purpose. (4) That the said company was believed to be insolvent. It is important to keep in mind, as we have before said, that these allegations are made merely on the information and belief of the complainants.

As said by Stone, C.J., in Thompson v. Tower Mfg. Co., 104 Ala. 140, 16 So. 116, and often reaffirmed by this court "It should be a strong case of emergency and peril, well fortified by affidavits, to authorize the appointment of a receiver, without notice to the other party." Pollard v. Southern Fertilizer Company, 122 Ala. 409, 25 So. 169. These affidavits, moreover, are required to be distinct and precise. General allegations are insufficient, especially when fraud is one of the grounds relied on for the interference of the court. If fraud is claimed to be a ground of relief, the facts constituting it should be stated. In other words, the verification should be based on the knowledge of the affiant, and if based upon...